Asia stocks trim declines as U.S. election uncertainty eases

Asian stocks experienced a reduction in early losses on Wednesday as investors gained clarity regarding the outcome of the U.S. midterm elections. Democrats emerged victorious, securing control of Congress from President Donald Trump's Republicans. KOSPI in South Korea rose 0.6%, reversing most of its earlier 4% decline, driven by strong performances from Samsung Electronics and SK Hynix.

Japan's Nikkei 225, however, closed 1.4% lower after a nearly 5% dip earlier in the day. The broader TOPIX index fell 0.9%. Technology stocks continued to face pressure due to concerns over elevated valuations, heavy AI investments, and uncertain returns. The early election results sparked worries about potential political gridlock in Washington, as Democratic victories in several Republican strongholds suggested control of both congressional chambers.

This shift raised concerns about increased regulatory scrutiny of AI and possible restrictions on data center construction. Yet, some investors viewed the election outcome as a removal of uncertainty that had kept markets cautious before the vote. Strong results from Advanced Micro Devices, reporting a 45% increase in third-quarter revenue, provided reassurance for investors.

Singapore's Straits Times Index slipped 0.2% to 5,193.61, marking a 10% drop from its September all-time high. If losses persisted until market close, the index could technically enter correction territory. China's Shanghai Composite and the blue-chip Shanghai Shenzhen CSI 300 both surged 2%; Hong Kong's Hang Seng increased 1.5%.

Australia's S&P/ASX 200 declined 0.6%, while India's Nifty 50 rose 0.1%. Investors also kept a watchful eye on the progress of U.S.-Iran peace talks, with both Tehran and Washington reportedly reviewing fresh proposals from mediators to prevent a return to full-scale war. Oil prices remained volatile, as traders weighed the potential easing of supply disruptions against the risk of renewed escalation.

In China, the RatingDog services purchasing managers' index fell to 50.8 in October, marking the slowest expansion in three months.